Do American Drivers Get a 'Dictator Discount' on Gasoline?

By Lisa Margonelli

Today, as Anti-Mubarak protests in Egypt wear on, Brent crude
oil prices are continuing their week long rise above $100 to levels not
seen since 2008. While US drivers are fretting about the effect even
higher gas prices will have on their commutes and the economy, we should
also be asking ourselves the opposite question: Have dictatorships in
the Middle East been giving us discounted gasoline? With our
notorious dependence on cheap gas, have we been
the beneficiaries of an authoritarian markdown at the pump?

Watching
the oil market, it's obvious that this week's rise in prices is not
really attributable to real problems around the Suez Canal or the Sumed
pipeline, but lies in less tangible fears about stability. Steve LeVine,
at Foreign Policy, calls the rise in prices "classic
casino behavior." But more and more, the fear that's being
articulated is that all the regimes in the Middle East are vulnerable,
and the days of cheap oil may be over. "The OPEC president has said that
oil above $100 is not desirable, but while Middle-East unrest continues
prices will probably hold around here," Bache Commodities analyst
Christopher Bellew said. "The terrible fear must be of this unrest
spreading to a major producing country like Saudi."

The Saudis are a notable authoritarian regime in the Middle East, but by
no means the only one -- or the only one that could significantly raise
oil prices. Look at this rendering of the Economist's
Democracy Index Survey for 2010. Virtually all of the countries in
the region are authoritarian, with the exception being Iraq. Now look at
the EIA's map of oil production, and you can
easily see the problem. Compare it with the tab about oil reserves
for a glimpse of the future.

It's not possible to quantify the
relationship between the authoritarian status quo in the Middle East and
the cost of a gallon of gas here because the oil market is more art
than science. (I invite readers to estimate in the boards.) But I'd
imagine that a few months of political uncertainty in the Middle East
could send gas prices up perhaps an extra 50 cents a gallon. A prolonged
period of uncertainty would certainly cost U.S. drivers more. Just
yesterday, Ben Bernanke described higher oil prices as "a
kind of tax," that could slow the recovery, an intellectual
formulation that I think is basically accurate. But it may be time to
fear not higher gas prices, but the undemocratic implications of lower
ones.

The economic benefits of cheap gas have a moral price for
U.S. consumers. There's a lot of scholarship tying oil exports to
authoritarianism. See UCLA professor Michael
Ross's work, for one. (Ross has also done a fascinating
study of the relationship between oil exports and women's rights.)
This
nuanced essay by Larry Diamond examines the role of oil money in
creating and reinforcing the structure of states in the Middle East, and
the geopolitics that causes bigger powers to shower them with
diplomatic and economic legitimacy. Diamond follows the implications of
this repression into non-oil areas like the Israel-Palestine conflict.
Diamond sees the solution as a prolonged period of low oil prices -- but
that is precisely NOT what the oil market will deliver as more regimes
are threatened by protests like the ones going on in Egypt. As we've
seen this week, turmoil makes prices rise.

Here's the rub:
America's oil problem runs deeper than our dependence upon authoritarian
regimes for cheaper gasoline to keep our economy running. The very
mechanism of the oil market reinforces the status quo by raising oil
prices when these regimes are threatened, potentially keeping them (or
others nearby) in power.

And this suggests that we need a whole holistic approach to deal with the various tentacles of our oil
problem. American consumers express their will not only at the voting
booth but by buying products that support everything from breast cancer
research to rainforest preservation to tuna fishing methods to PAC's.
Merely buying gasoline, though, with its dictator discount, makes a
mockery of these righteous efforts. The solution to our gasoline
problem -- both economically and morally -- will require much more than
"right" buying: concerted legislative action to lower oil demand,
funding for science for alternatives for transportation, diplomacy to
lower oil prices, and of course, diplomacy that encourages the will of
the people in the Middle East, whatever that turns out to be.